unilever full year 2020 results & strategic refresh · • virus continues to cause volatility...

Unilever Full Year 2020 Results & Strategic Refresh

4th February 2021

Alan Jope & Graeme Pitkethly

This announcement may contain forward-looking statements, including ‘forward-looking statements’ within the meaning of the United States Private Securities

Litigation Reform Act of 1995. Words such as ‘will’, ‘aim’, ‘expects’, ‘anticipates’, ‘intends’, ‘looks’, ‘believes’, ‘vision’, or the negative of these terms and other similar

expressions of future performance or results, and their negatives, are intended to identify such forward-looking statements. These forward-looking statements are

based upon current expectations and assumptions regarding anticipated developments and other factors affecting the Unilever Group (the ‘Group’). They are not

historical facts, nor are they guarantees of future performance.

Because these forward-looking statements involve risks and uncertainties, there are important factors that could cause actual results to differ materially from those

expressed or implied by these forward-looking statements. Among other risks and uncertainties, the material or principal factorswhich could cause actual results to

differ materially are: Unilever’s global brands not meeting consumer preferences; Unilever’s ability to innovate and remain competitive; Unilever’s investment choices

in its portfolio management; the effect of climate change on Unilever’s business; Unilever's ability to find sustainable solutions to its plastic packaging; significant

changes or deterioration in customer relationships; the recruitment and retention of talented employees; Unilever's ability to find sustainable solutions to its plastic

packaging; significant changes or deterioration in customer relationships; the recruitment and retention of talented employees; disruptions in our supply chain and

distribution; increases or volatility in the cost of raw materials and commodities; the production of safe and high quality products; secure and reliable IT infrastructure;

execution of acquisitions, divestitures and business transformation projects; economic, social and political risks and natural disasters; financial risks; failure to meet

high and ethical standards; and managing regulatory, tax and legal matters. A number of these risks have increased as a result of the current COVID-19 pandemic.

These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, the Group expressly disclaims

any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Group’s

expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Further details of potential risks and

uncertainties affecting the Group are described in the Group’s filings with the London Stock Exchange, Euronext Amsterdam and the US Securities and Exchange

Commission, including in the Annual Report on Form 20-F 2019 and the Unilever Annual Report and Accounts 2019.

Safe harbour statement

2

Today’s agendaFull Year 2020 Results

Strategic Refresh

Full Year 2020 Results & Strategic Refresh

3

Full Year 2020 Results

2020: Full year results

Competitiveness

>50%

>60%% Business Winning Q4

% Business Winning FY

Absolute Profit

€9.4bn +0.7%

UOM

UOP

Cash

€7.7bn

+€1.5bnvs FY 2019

Free Cash Flow

Absolute UOP as reported, UOP growth rate on constant basis5

(60)bps

Competitive growth through operational excellence

6

Improved penetration

Impactful innovation

Design for channel

Purposeful brands

Fuel for growth

Strategic change agenda

Legal simplification

Sustainable business

Shaping the portfolio

7

FY 2020 Growth

• Volume-led competitive growth with >60% business winning value share (Q4)

• Virus continues to cause volatility across markets with channel closures and restricted living returning

• Some markets opening up economies to protect livelihoods whilst balancing restrictions to protect health

• Volatility to continue into 2021

3.3%

Q2 2020

Q3 2020

Q42020

Q1 2020

(0.3)% 4.4% 3.5%0.0%

0.2%

UVGUPG

USG

1.6%FY UVG

1.9%FY USG

8

Category dynamics €51bnTurnover FY

2020

Hygiene

Q1 Q2 Q3 Q4

€9bnTO FY 2020

7%26% 19%

11%

FY 16%

In Home

Q1 Q2 Q3 Q4

€15bnTO FY 2020

FY 12%

4%17% 12% 13%

Laundry

Q1 Q2 Q3 Q4

€8bnTO FY 2020

FY 1%

0% (1)%4% 2%

Out of home

Q1 Q2 Q3 Q4

€4bnTO FY 2020

FY (26)%

Personal care

Q1 Q2 Q3 Q4

€14bnTO FY 2020

FY (4)%

(2)% (10)% (3)% (2)%

(18)%(42)%

(16)% (20)%

Prestige

Q1 Q2 Q3 Q4

€0.7bnTO FY 2020

FY (2)%

(2)% (10)%

8%

(5)%

9Hygiene: Skin Cleansing + Home & Hygiene Personal Care: Personal Care excl. Skin Cleansing

Beauty & Personal Care

Skin Cleansing Prestige Rest of BPC

+15% FY USG+9% Q4 USG

(2)% FY USG(5)% Q4 USG

(4)% FY USG(2)% Q4 USG

1.2%FY UVG

1.2%FY USG

>50%business throughecommerce channel

Rest of BPC: Hair care, Deodorants, Skin Care, Oral Care10

Foods & Refreshment

In Home Out of Home


0.1%FY UVG

1.3%FY USG

UFS included in other categories

(26)% FY USG(20)% Q4 USG

J F M A M J J A S O N D

(71)% April USG (25)% Q4 USG

Second lockdowns

Food Service impacted by second wave lockdowns

11

Home Care

Home & Hygiene Laundry


5.1%FY UVG

4.5%FY USG


12

eCommerce

Brazil+44%

China+54%

USA+123%

+61%

9%

eCommerce Growth

eCommerce % of Sales

eB2B+65%

Pure play+48%

Omnichannel+99%

eB2B excludes UFSGrowth rates FY

13

Asia / AMET / RUB

• China: back to normal after strict lockdown

• India: economic pick-up

• SEA: markets in decline

• Turkey: strong volume-led performance

• Winning competitively across all regions

2.1%

Q2 2020

Q3 2020

Q42020

Q1 2020

(1.8)% 4.5% 2.6%(3.7)%

0.5%UVGUPG

USG

0.0%FY UVG

0.4%FY USG

14

Latin America

• Brazil: growth resilient but limited mobility

• Argentina: growth despite restrictions

• Mexico: decline in difficult environment

• Competitive in volatile region

Q2 2020

Q3 2020

Q42020

Q1 2020

(0.8)% 6.5% 5.8%4.9%

2.9%UVGUPG

USG

2.8%

0.9%FY UVG

4.1%FY USG

15

North America

• In Home F&R growth continues

• Hygiene demand high but down from peak

• Food Service & Prestige impact of c.(2.4)%

• Competitiveness improving sequentially

Q2 2020

Q3 2020

Q42020

Q1 2020

9.5% 9.1% 7.1%4.8%

(1.3)%

UVGUPG

USG

8.5%

8.1%FY UVG

7.7%FY USG

16

Europe

• Channel closures impacting Out of Home

• In home F&R demand high

• UK & Germany: growth maintained

• Italy & Spain: declines driven by Out of Home ice cream

• Strong and improved competitivenessQ2

2020Q3

2020Q4

2020Q1

2020

(4.5)% (0.8)% 0.8%1.4%

(1.1)%

USG

1.8%

0.2%FY UVG

(1.0)%FY USG

17

UVGUPG

FY 2020: Turnover -2.4%

USG 1.9%

€52.0 bn

0.3%

€50.7 bn

A&D 1.2%

1.6%

1.4%

(0.2)%

(5.4)%

€53.6 bn

18

FY 2020: Underlying operating margin

H1 +1.0%H2 (1.0)%

19.1%

0.0%

(0.9)%

(0.1)%

18.5%

0.4%

19

Gross Margin (0.5)% BMI

FY 2020: Underlying earnings per share

€2.55

€2.48

0.5%

1.9% (1.6)%

3.0%

0.3%

(6.5)%

€2.65

Constant Underlying EPS +4.1%

Current Underlying EPS (2.4)%

20

FY 2020: Cash flow, balance sheet & returns

€7.7bn

+€1.5bnVs 2019

Free Cash Flow

Cash Net Debt

129%

Above 100% since 2018

Cash Conversion

Cash Conversion

1.8x

€20.9bnNet debt

Net debt/EBITDA

18%

Maintained in high teens

ROIC

ROIC

21

FY 2020: Summary

22

Resilience, agility, and responsiveness

Stepped-up competitiveness, profit & cash delivery

Continued strategic progress

Strategic Refresh

Sustainable business driving superior performance

What we are going to cover

1. Vision and purpose

2. Our differentiating strengths

3. Delivery against strategy

4. Strategic choices

5. Multi-year financial framework

6. Conclusion


24

Our vision is to be the global leader in

sustainable business. We will demonstrate how our purpose-led,

future-fit business modeldrives superior performance,

consistently delivering financial results in the top third of our industry.

Vision and Purpose

25

Differentiating strengths

Our differentiating strengths

1. Powerfulportfolio of leadingcategory andbrand positions

2. Strong presencein growth marketsof the future

3. The globalleader insustainablebusiness

27


1. Powerful portfolio of leadingcategory and brand positions Global category

leadership positions

Most effective marketer

for 4 consecutive years

50%of turnover from 13 billion Euro brands

81%brands #1 or #2 in

their market

28

Our differentiating strengths: Powerful brand portfolio

29


1. Powerful portfolio of leading category and brand positions2. Strong presence in growthmarkets of the future Leading

positionin growth markets

40bnconsumer reach points;

more than any other competitor

Market development

a core capability

93%local leaders

30

31

Our differentiating strengths: Strong presence in growth markets of the future

Unilever market position

#3#4 #1 #7 #1 #1 #2 #1 #2 #1

Absolute GDP growth 2020 – 2030 US$trn

Unilever sales €bn14.1

8.6

4.7

2.2

0.9 0.7 0.7 0.7 0.7 0.7

PhilippinesChina India USA Indonesia Turkey Vietnam Pakistan Brazil UnitedKingdom

2.8

5.0

9.4

2.5

1.0 1.00.6

2.4 2.41.2


3. The global leader in sustainable business

of GlobeScanSustainability Leaders survey for last 10 years

Topin Dow Jones

Sustainability Index since 2014

Leader

Ratings in CDP: Climate, Water and Forest

‘A/A-’ Strategyfully embedded in

our business and brands with purpose

32

Our differentiating strengths: Top of GlobeScan SustainAbility Leaders Survey

Unilever

42

26

14

8 87

65 4 4 3 3 3

Patagonia Ikea Interface Natura & Co

Danone Tesla Nestle Microsoft Orsted Marks & Spencer

L’Oreal Tata

Experts, unprompted, total mentions, 202033

Our differentiating strengths: The global leader in sustainable business

Purpose drives brand power Brand power drives volume share

R² = 0.71R² = 0.76

-10

0

10

20

30

40

50

60

70

80

90

0 10 20 30 40 50 60 70

Volu

me

Shar

e

Brand PowerBrand Power

34

Our differentiating strengths: The global leader in sustainable business

Lessrisk

More growth

Lowercost

Strongertalent

Purposeful brands

growing 2x€1.2bn

since 2008100%

renewable electricity across our operations

54 of 75Employer of choice in

markets measured

35


1. Powerfulportfolio of leadingcategory andbrand positions

2. Strong presencein growth marketsof the future

3. The globalleader insustainablebusiness

36

Delivery against our strategy

USG in 3-5% range

Simpler, faster organisation

Accelerated margin progression

100% cash conversion by 2020

Faster portfolio evolution

Simpler capital/legal structure

Increased leverage & returns

3% average, 2017-19

Foods & Refreshment integrated, COO role, delayered organisation

UOM 16.4% 19.1% >€6bn savings 2017-19

>100% since 2018

Built Prestige business, Spreads exit, Tea separation

Unification of legal structure

Sustained high teens ROIC, net debt at 1.9x EBITDA

Our 2017 strategy scorecard

38

A flatter, leaner organisation…

Supply ChainFinance

Human ResourcesLegal

Global MarketingCommunications

Sustainability

CEO

Beauty & Personal CareHome Care

FoodsRefreshment

N AmericaLatin America

EuropeNAMETRUB

AfricaN AsiaS AsiaSEAA

Global Functions Divisions Clusters

39

2018 organisation

A flatter, leaner organisation…

15 performance management units

Western Europe

UK and Ireland

Middle Europe

East Europe

South East Asia and Thailand

Australia and New Zealand

Vietnam

Indonesia

Philippines

North America

Latin America

NAMET and RUB*

*North Africa, Middle East, Turkey, Russia, Ukraine & Belarus.

Africa

North Asia

South Asia

COO

40

…and a new model for operational excellence

Improved penetration

Impactful innovation

Design for channel

Purposeful brands

Fuel for growth

60% cells improving

Covid-19 response: Lifebuoy, Dove, Domestos

eComm: +61% USG FY ‘20

Nearly 60% of brands seen as more purposeful

Free cash flow: €7.7 bn

41

Driving a rebound in competitiveness

Mar 20

Dec 17

Mar 18

Jun 18

Sep 18

Dec 18

Mar 19

Jun 19

Sep 19

Dec 19

% Business winning value share since 2017

44%

48%

44%

40%42%

47%49%

47%

44%

48%47%

51%53%

Dec 20

Jun 20

Sep 20

% business winning, MAT

Dec20

Dec 19

Mar20

Jun 20

Sep 20

47%46%

49%51%

65%

% business winning, last 12 weeks

% Business winning value share during 2020

42

Strategic Choices

Five strategic choices

1. Develop our portfolio into high growth spaces

44

We will continue to evolve our portfolio towards higher growth

segments in home care, beauty, personal care,

and foods.

Clear criteria for investment choices

Scale High growth Potential in growth countries

Route to leadership

Branding & technology sensitive

Hygiene Skin care Prestige beauty

Functional nutrition

Plant-based foods

46

Deo

dor

ant

s

Pres

tig

e Be

aut

y

Func

tion

al n

utri

tion

Skin

Cle

ans

ing

Skin

Ca

re

Ora

l Ca

re

Hom

e &

Hyg

iene

Ice

Cre

am

Laun

dry

Ha

irC

are

Pla

nt-b

ase

d fo

ods

Scra

tch

cook

ing

Portfolio evolution into higher growth spaces

Beauty & Personal Care

Foods & Refreshment

Home Care

47


Deo

dor

ant

s

Pres

tig

e Be

aut

y

Func

tion

al n

utri

tion

Skin

Cle

ans

ing

Skin

Ca

re

Ora

l Ca

re

Hom

e &

Hyg

iene

Ice

Cre

am

Laun

dry

Ha

irC

are

Pla

nt-b

ase

d fo

ods

Scra

tch

cook

ing

48

Priority focus area


€16bn M&A capital deployed ‘15-20

72%

Deo

dor

ant

s

Pres

tig

e Be

aut

y

Func

tion

al n

utri

tion

Skin

Cle

ans

ing

Skin

Ca

re

Ora

l Ca

re

Hom

e &

Hyg

iene

Ice

Cre

am

Laun

dry

Ha

ir C

are

Pla

nt-b

ase

d fo

ods

Scra

tch

cook

ing

Priority focus area

49

17% 3%

5%

4%

Building Prestige beauty and Functional nutrition to scale

2015 2016 2017 2018 2019 2020 2018 2019

€0.7bn

Prestige beauty

2020 Annualised

€1.1bn*

*Annualised for all acquisitions

Functional nutrition

2020

50



2. Win with our brands as a force for good, powered by purpose & innovation

51

Connecting with consumers of the future

GenX Millennial GenZ

63

72 75

56

Baby boomers

% of global adult population2020 = 55%

% of global adult population2020 = 45%

Source: GlobeScan, Healthy & Sustainable Living Report 2019 / UN population data

% motivated to be loyal to brands making positive impact

52

53

Putting brand purpose into action

Improve the health of the planet

• Clean Future: fossil-free formulations in Home Care

• 100% recyclable plastic packaging by 2025

• Ben & Jerry’s: campaigns for racial justice and refugees’ rights

• #Unstereotype campaign

Win with differentiated science and technology

• Proven effectiveness against SARS-2-CoV

• Three-year step-up in investment

• €85m investment in Wageningen R&D centre

Contribute to a fairer, more socially inclusive

world

Improve people’s health, confidence and

wellbeing

• Dove Self-Esteem Project: >65m young people. Aim to reach 250m by 2030

• Sunsilk ‘Explore More” – inspiring girls in the classroom




3. Accelerate in USA, India, China and leverage EM strength

54

Sharpening our focus in future growth markets

• €9bn business, 18% of turnover

• 10% of global growth to 2030

• Build on strong market positions in our categories

• No. 1 FMCG; 10% of turnover


• Significant market development opportunity

• €3bn business, 6% of turnover


• Continue to build on success momentum

• €1bn+ businesses in Brazil, Indonesia, Philippines, Turkey, Thailand, Mexico

• Building on our route to market strength

USA India C hina Leverage EM strength

55





4. Lead in the channels of the future

56

Brazil value pack image

A future-fit channel strategy

Accelerate pure-play and omnichannel eCommerce

Develop eB2B business platforms

Drive category leadership through shopper insight

• 14m distributive tradestores in Asia / Latam

• 1.5m enrolled into onlineplatforms

• Growing 65%, with top fourmarkets growing 77%

• Data-driven brandengagement andcommerce integration

• Advanced shopper insight

• Agile, trend-driven portfolio by channel

57




3 Accelerate in USA, India, China and leverage EM strength


5. Build a purpose-led, future-fit organisation and growth culture

58

People shots

Driving growth through capacity, capability and culture

Be a beacon for diversity, inclusion and values-

based leadership

Unlock capacity through agility and

digital transformation

Continue to generate fuel for growth

• Leveraging technology to dynamically allocate resources

• Agile at scale

• Championing equity and inclusion: gender, race, disability and LGBTQI+

• Prepare for Future of Work

• Continued upskilling of employees

• 5S, ZBB & restructuring programmes

• Savings reinvested in future growth spaces

Build capability through lifelong

learning

59





5. Build a purpose-led, future-fit organisation and growth culture

Operational Excellence


60

Multi-yearfinancial framework

Steps to higher growth

Market development

(Growing markets)

Operational excellence

(Competitive growth)

Continued portfolio evolution

62

Multi-year financial framework

Growth Profit Cash

Underlying sales growth ahead of our

markets 3 – 5% USG

Profit growth ahead of sales growth

Sustained strong cash flow

Growing dividendDelivering long term value creation through earnings growth

63

Restructuring investment

ROIC Leverage

64

Other long term financial metrics

Savings

€2bnper annum

€1bn for 2021 and 2022,

lower thereafter

Mid to high teens 2x

approx

Restructuring investments

2017 - 2020

Investment

Incremental savings

Average cash payback

€3.6bn

€1.5bn

3 years

2021 - 2022

Investment

Incremental savings

Average cash payback

€2bn

€1.3bn

3 years

• Investments:

• Supply chain network reset• Future Fit Operations

• Focused on European supply chain and UniOps

65

Capital allocation

Operational investment

Portfolio reshape

Returns to shareholders

• Brand growth andinnovation

• Sustainability

• Channel and digitalcapability

• Acquisitions

• Disposals

• Partnerships

• Dividends

• Share buybacks

• Minority buybacks

66

Conclusion

• Leveraging our threedifferentiating strengths

• Five clear strategic choices todrive our growth

• Delivering long term valuecreation

Our vision is to be the global leader in

sustainable business. We will demonstrate how our purpose-led,

future-fit business modeldrives superior performance,

consistently delivering financial results in the top third of our industry.

68


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